Newton (Newt) Love: Author Royalties

This will probably go over like a big loud fart at a snooty Black-Tie party. None the less, it is my free speech expression of the writing industry as I see it. I want to know how you feel before I spill blood on the battlefield.

Outrageous Remarks to get it going: Don't be a codependent enabler of a disfunctional industry. Don't help the abusive spouse(house) beat the codependent author any more. We need some SUNSHINE where the sun currently don't shine!

Let's start with first time authors. I am one. I know this part.

First time authors can't get an agent unless they have already sold a book. But if you have already sold books, why do you need an agent? All they would do is cut into your royalty money.

In a perfect world, that might be true. Unfortunately, the world is worse than imperfect. Most authors I know tell me that they are sure that their publisher is not paying all their royalties. Many of them have actual evidence of sales that never appeared on their royalty statements.

Authors need agents to get the largest possible advance on authors royalties as possible, since for most authors, that is the last money the author will ever see from the book, even if it back lists for decades.

One author I know told me how she called her publisher and her editor's assistant answered. The assistant told my author friend that the editor was taking her turn in the apartment in Paris France. Upon further inquiry, the assistant divulged that the publisher had bought the apartment a few years earlier. When the author asked where the publisher found the money, the assistant said, "You didn't hear this from me, but where do you think those author royalties that you and others have been asking about went?"

The publisher's usual response to requests for clarification to royalty statements is "Trust me."

In college, I had a Jewish study partner. I used to say "Trust me" when he asked me if I was sure I was right about an answer. He asked me if I knew what "Trust me" really meant. I asked for enlightenment. He explained that when a Jewish doctor says "Trust me, I'm the doctor!" or a Jewish lawyer says "Trust me, I'm the lawyer" et cetera, it means "F-ck you, I am the expert, and you are such an unlearned and inexperienced schmuck, so shut up and take my advice!"
I said "Oh, really?"
"Yeah."
"Then you really need to TRUST ME that the answer is right," I said.
We both laughed.

Since publishers are the only ones who know actual sales figures, it is hard to know if they are skimming from their authors. If an author requests an audit, the fees and proceedures typically required by publishers to see their figures are prohibitive. Additionally, publishers often use "joint accounting" which comingles several books into one account to make the tracing of sales for individual titles more difficult.

Nowadays, the circumstances for authors receiving royalty revenues from publishers is in the same as it was in the early part of the 20th century for musicians and composers receiving fair and honest royalties from publishers and record companies. ASCAP (1913) and BMI (1938) were formed to track public performances of copyrighted works. With these outside audits, it wasn't necessary to see the music publishers or record companies' books.

With ASCAP and BMI being paid from the moneys they wrest from publishers and record companies, they are sure to try to collect all they can. If there was an inaccuracy, then the publishers and record companies would pay the lawyer fees to audit books, and not the artists and performers.

The idea of forming a corporation like ASCAP or BMI to monitor author royalty payments in the book industry has been discussed many times. I believe that such a reform is long overdue. Any time that you have the entity responsible for collecting the revenues also being responsible for paying-out shares, the prerequisites for a breach of fiduciary responsibility are in place. No matter what the actual book sales for the period are, the publisher can easily produce a royalties statement that reports fewer sales, and therefor, a smaller royalty payment for the writer.

Most publishing houses are not audited by an outside accounting firm, excepting perhaps an occasional IRS visit. Even if they were audited, the auditors are looking to see if the books balance and nobody embezzled. They might check to see if the reported royalties were paid-out via cashed checks, but they are not likely to check to see if the sales reported were not reduced by an accounting trick like cancelling some number of sales with falsified returned book charges. Without a physical inventory from the wholesaler, it would be impossible to verify the publisher's numbers.

As the industry operates today, the author must accept their royalty statements on faith, or pay discovery fees that almost sure to cost more than could be recouped from the missing royalties that may be discovered by an audit.

A real life story from historical Annapolis MD: The IRS received a tip that one of the several restaurants in the Old-Town of Annapolis was skimming. (I would say which one, but don't want to get sued. It is in in the newspaper record if you search.)

The IRS wanted confirmation, so they supoenaed the delivery records of the restaurant suppliers to downtown (historical) Annapolis. They compared the revenue from meals served versus pounds of food delivered (as reported to the IRS in revenue) and found that -- on average -- all the resaurants in the historic district were about the same, except the one that the tipster reported. It was reporting half as much revenue on the volume of food delivered to them than was expected. The owner of that restaurant spent some time in jail on US Federal Income Tax Evasion.

There are many ways to build a case against publishers who cheat their authors out of royalty payments.

I think that all authors should ban together and as a class action, demand that we get an ASCAP / BMI type solution to our royalty income problems, and quit our codependent relationship with those that pimp us out and don't give us our share of the action.

There! I said it! Now I will probably be lashed and abused by the sychophants of the houses, and praised by the independent writers.

Just my $0.02.

Newt
 

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